A number of leading charity lawyers believe that the regulatory compliance cases conducted by the Charity Commission in recent years were unlawful – including the investigation into the Atlantic Bridge charity set up by Liam Fox MP.

Expanding on this later, he told civilsociety.co.uk that regulatory investigations were "effectively an abuse of power” by the regulator.

“The Charity Commission is a creature of statute and only has whatever powers Parliament gives it. There is a statutory procedure for carrying out inquiries which is in the Charities Act.

“It is not open to the Commission to frustrate the will of Parliament by going off on some frolic of their own and setting up some informal parallel system – however convenient and economic it may be.”

As a result, the investigation into Atlantic Bridge was unlawful, Davies said. “They said, ‘we are not conducting an inquiry’ and they weren’t, so it is a nullity and should never have happened in the first place. But quite what the relief would be I don’t know.”

He said he knew that other charity lawyers held the same opinion about the legality of regulatory cases: “This is not some independent eccentric view.”

Moira Protani, head of charities at Wilsons, is one such lawyer. She said the Commission’s habit of publishing regulatory case reports often embarrassed the trustees of the relevant charity by leaving the reader with the impression they had done something wrong, yet because there was no legal basis for the reports, the trustees had no right of redress.

“If there was a statutory inquiry the trustees could appeal the decision or take it to the Charity Tribunal, or do any number of things you would expect in a civilised and democratic society,” she said. “But where this undemocratic, unlawful and informal type of inquiry has been occurring, trustees have no redress, and that’s not right.”

She said that over the years several lawyers had complained to the Commission that the investigations were unlawful, and that although the regulator might blame budget cuts for its decision to scrap them, she suspected “they know the chips are down”.

Regarding the Atlantic Bridge case, Protani said the Commission had no power to tell a charity to cease its activities, as it did in that situation.

“If they thought the charity was not acting within its objects they could have opened an inquiry and removed the trustees,” she said. “They can regulate the charity if it’s done something wrong, but they can’t just tell them to cease all their activities.”

Regulatory investigations ‘proportionate and not unlawful’

However, Anne-Marie Piper, partner at Farrer & Co, did not agree that the regulatory compliance cases were unlawful; in fact, she described them as "a proportionate approach".

“Whilst it's true the Commission doesn't have a specific statutory authority, they have got a regulatory duty to disseminate good practice and they took the view that this is a way to do it. I thought it was a balanced approach.”

The Commission didn’t publish reports about every regulatory compliance case it investigated, only the ones where it felt there were lessons for the wider sector, Piper added. “And they never named individuals.”

“I think it’s a shame they are not doing them any more,” she concluded. “I thought they were a useful way of illustrating the things that were happening in the real world and disseminating learning in a practical way.”

Commission ‘has complete discretion’

The Charity Commission defended its conduct of the cases: “The Commission’s view is that regulatory compliance cases are not unlawful and that is not the reason we are restructuring this work or only carrying out statutory inquiries for our formal investigations work.

“The Commission, by virtue of the Charities Act, has complete discretion as to how it carries out its casework including how it decides to investigate or detect abuse.”

I don't think there is much fear of us lawyers making money out of a debate on the pages of Governance; and, as Christopher McCall said at the CLA conference (in extolling the virtues of ADR/mediation as opposed to going to court), "no-one gives money to charity for spending on legal fees"!

But, although I took the view that the CC's approach on regulatory compliance cases was 'proportionate' and arguably within their powers (and duties), I do feel that the CC could have done more, in reporting on outcomes as 'lessons for the wider sector', to anonymise such reports if they were not able to say clearly that there was no implied criticism of the trustees. The 'name and shame' approach is quite inappropriate in these situations.

Complete discretion is not a virtue and it is rude, contemptuous and downright wrong for the Charity Commission as a regulatory body to say and/or imply that is the case as can be perceived from the article.

Indeed the Commission should feel obliged to put the "complete discretion" in context as part of it's implementation of it's transparency and accountability policy.

In my experience, the regulatory case process was a proportionate way for the Charity Commission to promote and share good practice. The regulatory case reports were not published in every case, only in cases where there were key lessons for the wider sector.

I think it's unfortunate that this work is coming to a stop, whether for budget or other reasons. The sector will be poorer without it.

Having said that, I don't k now anything about the Atlantic Bridge case. The issue there may be rather different

This debate risks becoming a money-making venture for lawyers debating what is legal or not.
Surely the real issue is whether or not a so-called charity is operating within the law and its own Articles?

I used to investigate in a totally different field and we had a range of proportionate approcahes from having a quick look round a site and 'having words' with the owner, to a more rigorous but still informal review that mightbe followed by a 'watch out if you do this again you are in deep s**t' warning to formal legal investigations that sometimes led to legal action.

Comments

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

Robust but respectful debate

Strongly held opinions

Intelligent relevant discussion

The sharing of relevant experiences

New participants

We will not publish:

Rude, threatening, offensive, obscene or abusive language, or links to such material

Links to commercial organisations or spam postings. The comments board is not an advertising platform

The posting of contact details for yourself or others

Comments intended for malicious purpose or mindless abuse

Comments purporting to be from another person or organisation under false pretences

Gratuitous criticism, commentary or self-promotion

Any material which breaches copyright or privacy laws, or could be considered libellous

The use of the comments board for the pursuit or extension of personal disputes

Be aware:

Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media

Comments left by others may not be accurate, do not rely on them as fact

You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

Enjoy the opportunity to express your opinion and respect the right of others to express theirs

Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.